College News

Ag Instructor Vic Martin: Agriculture, Economics, and Time

Great Bend Tribune
Published November 28, 2021

This column was written before the Drought Monitor was released but based on the weather, it shouldn’t have changed much.  While the area is in okay shape, some moisture would be beneficial.  The six to ten-day outlook (November 28 to December 2) indicates we target to be 50% to 70% above normal temperatures and leaning 40% to 50% below normal precipitation. The eight to fourteen-day outlook (November 30 to December 6) indicates we have a 60% to 70% chance of above-normal temperatures and a 40% to 50 % chance of below-normal precipitation. 

Everybody who buys almost anything is aware that prices have increased and that after over a decade of almost no inflation, it’s rearing its head.  This has been especially noted when consumers are buying food, especially meat, poultry, and dairy products.  A previous column addressed the concerns of beef producers and agricultural groups of price manipulation by packers since the packing industry has become so concentrated.  The supply chain issues and lack of workers in agriculture and other industries is also well documented.  Other factors have also been discussed at length.  In agriculture, there is one more factor many don’t consider – time.

There is a fundamental law in economics: The Law of Supply.  This law states: “all other factors being equal, as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa.”  A corollary is under perfect competition there is freedom of entry and exit.  Or in English, when there are higher prices, producers will enter production of the commodity and be willing to supply more.  Economists also state the cure for high prices is more high prices.  High prices are indicative of a shortage – more demand than supply.  So if supply goes up and prices are high, eventually supply will be greater than demand and you will generate a surplus then prices will go down.  So why aren’t we starting to see this happening in the grocery shelf besides supply chain issues and artificially created shortages?  Time.

To grow the foodstuffs you eat takes time.  Increasing the production of certain commodities, say eggs, lettuce, even chicken takes relatively little time.  Dairy is different here since even though there are higher prices for milk and other dairy products. Dairy production is good and dairy producers certainly aren’t getting rich and many are losing money.  There are other issues here.  But what about beef.  Here are some facts.

  • After insemination, the gestation period for a cow is approximately 280 days and produces a 60 to 100-pound calf.  Figure around six months or so to get up to around 500 pounds.  It takes approximately a year for a 500-pound calf to 1,000 pounds.  Now it’s off to be finished for slaughter, typically a feedlot.
  • The time to attain weight at the feedlot is around four to six months.
  • If you add this all up, it's somewhere between 18 to 22 months old and that doesn’t include gestation.
  • Pork is quicker at around 24 weeks or so from birth to slaughter.

It’s obvious from this that no matter how badly they want to, producers can only work so quickly.